Utility Week

28 | 8TH - 14TH MARCH 2019 | UTILITY WEEK Customers Market view D espite the big six having massive mar- ket share, a combination of consumer distrust, squeezed margins and a new energy price cap makes them vulnerable to competition from the energy equivalents of Airbnb and Uber. Distrusted and unloved by some, they are ill-equipped to fend o• pow- erful and well-resourced disruptors seeking to harness emerging tech and the rise of the connected home to provide consumers with cheaper, more engaging energy propositions. You don't need to look any further than Google, which is in pole position to dip into the domestic energy market, following its purchase of Nest Labs and its development of a digital home ecosystem. One way the big six could counter this threat is through more e• ective use of the data they gather from smart meters. But if energy ‚ rms are truly to stay relevant, com- petitive and re-engage with consumers, they also need to harness technological change by forming smart partnerships. To pick the best partners, it's critical that utilities increase their level of interaction with customers – to help them gain a deeper understanding of customer needs beyond electricity. People are tired of having multiple dif- ferent contracts and providers. The winning companies or partnerships will be those that can solve many di• erent customer needs at once. An obvious starting point would be an alliance with appliance manufactur- ers, which have their own ambitions around data and the Internet of Things (IoT). Philips Lighting, for example, has announced a num- ber of strategic partnerships for its connected lighting system for the home, HUE, including with Amazon's Alexa and Baidu in China. Partnering with an energy provider could make sense for Philips, and could lead to a scenario in which, with one click, custom- ers could access their next bill, together with an estimate of how much they could save by using more eŒ cient appliances. It could even include links to order those appliances. IoT partnerships could also help big energy suppliers improve their relationship with enterprise customers. Open Energi has devised a technology to transfer IoT capa- bilities to power-generating assets. It sup- plies large-scale commercial customers such as water ‚ rms and supermarkets (includ- ing Sainsbury's) with a smart platform that can connect to and collect energy and operational data from assets such as aircon units, fridges and water pumps. This gives companies greater visibility of their energy consumption and allows them to man- age patterns of demand in real time – with potentially signi‚ cant ‚ nancial implications. The IoT is just one example of how a part- nership model could help energy suppliers embrace digital technologies. In 2018, Cen- trica unveiled a trial to explore blockchain technology. Delivered with energy block- chain pioneer LO3, Centrica's goal is to ‚ nd new and better ways of delivering energy and services to customers – an ambition that could have a positive impact on loyalty. In the same arena, start-up Electron is develop- ing a blockchain trading platform that will incentivise electricity customers to — ex their energy consumption to balance supply and demand. Technical support is being pro- vided by Germany's Siemens; several energy ‚ rms have already built a consortium around the platform, including EDF Energy. Embracing expertise through collabora- tion is also likely to be critical to the big six as they attempt to secure a leadership posi- tion in emerging technologies such as elec- tric vehicles (EVs). Car manufacturers want to build holistic packages to sell alongside their vehicles, with home charging and charging on the go included. Establishing and operat- ing public charging networks o• ers an oppor- tunity for energy suppliers to gain a foothold in an adjacent new market, where their scale and existing infrastructure potentially o• ers a competitive advantage and makes them an ideal partner for auto brands. None of this is likely to happen without collaboration, particularly now that major companies are invading from the other direc- tion. Take Shell's purchase of independ- ent supplier First Utility. Combined with its acquisition of EV charging ‚ rm NewMotion, the company has a presence across the elec- tricity supply chain, from producing natural gas for use in generation, investing in solar and wind, to selling and marketing electric- ity through First Utility. So disruptors are not necessarily recently launched start-ups. Sealing partnerships is not always intui- tive for hierarchical legacy players. But inno- vative alliances, combined with improved use of data and analytics plus a sharp focus on consumer need and experience, could be the magic formula that gives UK energy com- panies a chance of holding back the disrup- tors lining up to steal their market share. Nadja Peltomäki, business design lead and energy specialist, Futurice Keeping tanks off the lawn Innovative alliances and a focus on consumer need and experience could give UK energy suppliers a chance of fi ghting off the fi rms lining up to steal their market share, says Nadja Peltomäki. Philips has partnered with companies such as Amazon for its HUE connected lighting system

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